Ultimately, the development of Halal logistics is quite similar to the one we know in the Islamic Banking, both have to respect the principles of the Shari'ah.
Shiping and logistics in Luxembourg
The Commission for Maritime Affairs (Commissariat aux Affaires Maritimes, CAM - the Luxembourg supervising authority) celebrated its 20th anniversary in 2010. In 1990, Luxembourg introduced the Maritime Act to create the maritime public registry and to create the CAM which is under the responsibility of the Ministry of Economy and Foreign Trade since 2004.
Luxembourg is one of the largest inland registries in the world, with more than 200 registered commercial vessels reaching 1 million gross tons.
In 2008, in Luxembourg, the Cluster for Logistics and the Maritime Cluster were founded in order to enhance and strengthen Luxembourg as a major intercontinental logistics hub in Europe and as a major landlocked maritime jurisdiction.
With its central position and direct air, hinterland waterways, highway and railway links, Luxembourg has become one of the European major distribution hubs for an impressive variety of goods and products.
As per the World Banks Logistics Performance 2010 Index, Luxembourg ranks 5th compared to 154 other countries whereas it ranked only 23rd in 2007.
The airport of Luxembourg is now the 5th largest air freight platform in Europe and the national air freight carrier, Cargolux, has a world market share of 4%.
Islamic Finance in Luxembourg
Despite being a non-Muslim country, Luxembourg has a long-lasting experience in Islamic finance.
In 1978, Luxembourg was the first western country that hosted an Islamic finance institution. In 1983, the first Shari'ah compliant insurance company in Europe was established in Luxembourg and in 2002 Luxembourg was the first European stock exchange to list a Sukuk.
The Luxembourg Central Bank became the first non-Muslim organization member of the Islamic Financial Services Board (IFSB) in 2009.
In 2010, the Luxembourg Tax Authorities released two circulars clarifying the tax treatment applicable to instruments of Islamic finance in terms of income tax and indirect tax, followed in January 2011 by the Luxembourg Supervisory Authority of the Financial Sector issuing a statement which clarifies certain rules applicable to the sukuk. In May 2011, Luxembourg will be the first European country to host the annual summit of the IFSB.
It is thus hardly surprising that Halal and its implications on the maritime, logistics and finance sectors have gained increased attention in Luxembourg.
Interest for Halal in Europe
For the time being, we see a growing interest for Halal products in Europe. The Muslim consumers are ready to pay more for products guaranteed as Halal from their production to their distribution.
The airport of Lige (Belgium), being in Europe the 8th biggest freight airport, aspires to become an Halal logistics hub within two years.
The port of Marseilles-Fos (France), being in the top 40 of the biggest ports, will host the 3rd World Halal Forum Europe. The port aspires to become an Halal logistics hub to attract the traffic of Halal products coming from Malaysia, China and Brazil and then to dispatch these goods to the Middle- East and North-Africa.
Since the 1980s the Swiss group Nestl, produces Halal-certified products and is the worlds leading manufacturer of Halal industrial food. In 2008, the Halal products represented 5% of Nestls annual sales, whereas 20% of Nestls factories have an Halal certification. The French supermarket group Carrefour has launched its own Halal brand and the fast-food restaurants Quick has opened Halal restaurants in France.
Halal from A to Z
During a whole supply chain process, it is important that the product remains Halal from the sourcing to the distribution. A brand owner is responsible of his products Halal integrity.
It should be noted that the majority of Halal products are produced in non- Muslim countries and their industries and that subsequently these products have to be transported to their final place of distribution, mostly in Muslim countries.
At every stage of a supply chain process, the main principle to be respected is the segregation of Halal and non-Halal goods.
A crucial stage is the storage and warehousing. The goods spend a lot of time at this stage and are manipulated several times which makes it sensitive to cross-contamination.
The Halal goods are not mixed on pallets or in a common transport like a container or a bulk carrier. During the transportation, the product conditions (cool keeping), and hygiene and sanitary requirements have to be met.
The transported Halal goods are then unloaded in a terminal (port, airport, etc.) which is a center of complex multimodal transportation network giving access to other transportation means like waterway, railway, airway and highway. Due to an impressive number of parties involved (customs, inspection, terminal operators, etc) and the manipulations performed, it should be ensured that the Halal integrity is not compromised in a terminal.
Even if the Muslim community is relatively small (more than 10,000 Muslims) in Luxembourg, the country could play an important role in an Halal compliant supply chain.
The industries from Luxembourg could be involved in several steps of an Halal compliant process: at the sourcing (ingredients, additives and other components), at the production (agricultural product, pharmaceuticals, etc.), at the packaging, at the labeling, at the warehousing and storage and at the transport, all funded via Shari'ah compliant finance instruments.
Being an important logistics hub, Luxembourg should not miss the Halal train to place its logistics industry within the top tier segment. This move might trigger a new surge for Luxembourg corporate and finance products, giving an additional impetus to the Luxembourg finance, logistics and maritime sectors.
By its attractive legal and tax frameworks, its impressive list of double tax treaties signed and the European lowest VAT rate, Luxembourg is an ideal place to domicile several entities of an international logistics group.
A maritime group would finance and hold its vessels fleet through Luxembourg maritime companies. A logistics group that invests in Research & Development could place their Intellectual Property rights in a Luxembourg company which will then grant licenses to the other group companies.
Functions like, for example, cash management, finance, management of Halal certifications could be coordinated, managed and centralized via a Luxembourg company. By centralizing its finance and corporate functions through Luxembourg, a logistics and maritime group could realize economies of scale, improve its internal organisation and benefit of tax efficiencies.
source: Business Islamica